DOJ Announces Tougher Stance on Corporate Criminal Enforcement
On October 28, 2021, Deputy Attorney General Lisa Monaco announced new policies from the U.S. Department of Justice (DOJ) related to corporate and white-collar enforcement actions. Based on these new DOJ policies, corporations and executives will be subject to tougher standards when the government is investigating and prosecuting corporate crimes.
After a marked decrease in corporate enforcement during the Trump administration, most legal observers had been anticipating that the Biden administration would increase its emphasis on prosecuting corporate crime. In her remarks at the ABA's 36th Annual National Institute on White Collar Crime, DAG Monaco signaled that the Biden administration is in fact prioritizing the prosecution of corporate crime and DOJ is focused on holding accountable corporate wrongdoers and their executives.
The new DOJ measures announced by DAG Monaco include:
- Cooperation Credit: For a corporation to receive credit for cooperating with the government, it must disclose evidence of all individuals involved in or responsible for the conduct under investigation. Corporations seeking to cooperate with the government will no longer be able to limit disclosures to those individuals who were "substantially involved" in the conduct at issue.
Instead, corporations must disclose all non-privileged information about implicated individuals to receive any cooperation credit. DAG Monaco emphasized that this full disclosure will allow the government to conduct its own investigation and to evaluate the culpability of all individual actors, regardless of their position, status, or seniority.
The renewed emphasis on individual accountability signals an increased focus on prosecution of corporate executives, and realigns DOJ's current policies with the Yates memo, which was issued in September 2015 and focused on the disclosure of information related to individual culpability.
- Evaluation of Full Compliance History: When evaluating the appropriate resolution for a corporation that is under criminal investigation, DOJ will consider the full scope of the corporation's past history of non-compliance. DAG Monaco explained that when making decisions about whether to enter into a deferred prosecution agreement (DPA) or non-prosecution agreement (NPA) with a company, DOJ will not focus solely on other instances of similar misconduct, but will instead evaluate instances of non-compliance involving other areas of law, including state or foreign laws, and run-ins with other government regulators.
For example, in a tax investigation, the government will look at other instances of non-compliance with tax laws, but will also consider violations of environmental laws, money-laundering laws, and other laws. This more expansive focus may result in DOJ taking a tougher stance on corporate resolutions involving companies with a history of misconduct.
- Corporate Monitors: DOJ will use corporate monitors in appropriate cases to observe the corporation's compliance with the measures it has agreed to as part of a corporate criminal resolution. DAG Monaco clarified that to the extent previous DOJ guidance suggested that monitors were disfavored, DOJ is rescinding that guidance.
As a result of this change, federal prosecutors will have the ability to require the imposition of independent monitors whenever necessary to satisfy DOJ that a company is fully complying with its compliance and disclosure obligations under a DPA or NPA.
In addition to these three policy announcements, DAG Monaco previewed a renewed focus on "recidivist" corporate defendants. DAG Monaco noted that 10 percent to 20 percent of significant corporate resolutions involved companies that previously entered into similar resolutions with the government, and indicated that, going forward, DOJ will consider whether pretrial diversion (through a DPA or NPA) is appropriate for these types of offenders or whether tougher measures are required.
She also noted that DOJ is in the process of examining previous DPAs and NPAs to evaluate whether the corporate defendants in those cases are complying with the terms of those agreements, and noted that DOJ recently sent breach notices to two multinational corporations that failed to comply with their obligations under a DPA or NPA.
Advice for Companies
DAG Monaco's remarks leave no doubt that DOJ is taking a tougher stance on corporate criminal misconduct with the goal of encouraging responsible corporate behavior. As DAG Monaco noted in her remarks, DOJ's "responsibility is to incentivize responsible corporate citizenship, a culture of compliance and a sense of accountability."
In light of DOJ's renewed focus on corporate enforcement, companies should take a close look at their corporate culture and compliance efforts and evaluate whether investments should be made to bolster a culture and practice of accountability and compliance within their organization. Given that DOJ will be examining the full scope of a company's history when evaluating the appropriate resolution in a corporate investigation, the company should scrutinize all aspects of its business operations and implement compliance measures where appropriate.
Furthermore, DOJ expects companies to take compliance measures seriously, so existing compliance functions should be examined to determine if they are effective, or if improvements should be made. The implementation of such measures on the front-end could prevent DOJ enforcement actions or put the company in a better position in the event the company comes under government scrutiny.